Email delivery service Mailgun spins out of Rackspace and raises $50M

Mailgun, a Y Combinator-incubated email delivery service that was acquired by Rackspace in 2012, today announced that it is being spun out of Rackspace and that it has raised $50 million. Rackspace itself, of course, is going through a transition period now that it has become a private company again and given that email delivery isn’t one of its core services, the company decided to spin Mailgun out into its own unit again.

“As Rackspace focuses on delivering expertise and Fanatical Support for the world’s leading clouds and serving more enterprise customers, we have been spinning off services that are not core to this strategy including our Exceptional, JungleDisk and Cloud Sites businesses,” Rackspace’s U.S. PR manager Brandon Brunson told us when we asked for a comment on this move. “In our latest transaction, we signed an agreement to sell our Mailgun business to Turn/River Capital, the same San Francisco-based private equity firm that purchased our Exceptional business in 2015. Turn/River Capital will be a great partner for Mailgun, which will allow that business to continue to grow and thrive. Financial terms of the sale will not be disclosed.”

The new financing round for Mailgun was led by Turn/River Capital, with participation from Scaleworks and — no surprise — Rackspace. William Conway, who was previously the GM of Mailgun at Rackspace will become the new company’s CEO. Mailgun says it will use the funding to accelerate its product roadmap, drive its growth initiatives and expand customer support.

Like similar email delivery services, Mailgun offers developers an easy way to programmatically send emails to their users. Its current users include the likes of Slack, GitHub, Stripe and Lyft. Unlike more consumer-oriented competitors like Mailchimp, Mailgun squarely focuses on the developer experience, just like Amazon’s Simple Email Service or SendGrid’s email API service.

“Developers are at the heart of everything we do. We are focused on solving the daily problems developers face when integrating and managing email inside of their applications. Our independence and influx of growth capital will allow Mailgun to drive a product vision that will thrill developers when they see what is coming down the pipe,” said Conway in a statement. “Turn/River Capital’s experience growing similar developer tools makes them a perfect match to help drive Mailgun’s continued growth.”